Free Response - District Court of Arizona - Arizona

Rebuttal to Defendanfs Expert Report
'This document serves to update my previous report and to rebut defendanfs expert report. Since
the Preliminary Report I have reviewed the partial semi-monthly pay records provided by the
Bank for seventeen (17) employees as well as approximately 30 Statement of Earnings’ records
given by the Bank to employees. The plaintiffs in this case had retained some of these
statements; however the Bank has not produced any copies of these records to date. Prior to my
Preliminary Report I had not been able to review these pay records. Because 1 did not have these
records I reached no conclusion as to the salary base at that time.
Salary Basis
. To qualify for any exemption under 29 1.T.S.C. 2l3(a) 1 one ofthe Erst items that need to be
examined is whether or not the employee is paid a guaranteed salary. ln the previous Regulation
Part 541.118 salary basis is described as;
An employee will be considered to be paid ‘on a salary bmis’ within the meaning of the
regulations if under his employpient agpeement he regularly receives each pay period on
a weekly or less frequent basis, a predetermined amount constituting all or part of his
svmnsnsansn.
gualig; or ouantity of the work performed. The employee must receive his full salggg for
any week in which he performs any work without regard to the number of davs or hours
worked. (Underlining added for emphasis).
The current Regulation Part 541.602 states:
A predetermined amount constituting all or part of the employee’s compensation, @h_
a.mon.n_t is not subject to reduction. (Underlining added for emphasis)
On the Earnings records retained. by the plaintiffs, but not supplied by the Bank, there is a
statement at the top of the record that these employees are "Full-Time Non—Exe1npt" (PL 00106,
110, 115,116, 115},120,121, l24,l26,127, 136,146, 147,150,15],162,163, 170.). Some of
the employees that I have interviewed have also been branch managers in the past. Their
understanding and the explanation that they have received from their supervisors and that they
have given to other "Pul1-Time Non—Exempt" employees is that when they are classified as non- ‘
exempt and they exhaust their leave and miss work they will be docked for time missed `
including partial days. This understanding and agreement does not meet the standards set forth
above in either the old or new Regulations. Based on these statements and the classification on
the Earnings records retained by some of the plaintiffs their pay is subject to reduction for time
missed.
As long as their pay is subject to reduction, these employees do not meet the salary test
requirement of the Regulations. The Bank has not provided pay records for all the employees for
all periods. The records the Bank has provided show that the employees were paid for hours that
they worked. l found at least one employee who was docked for not working a full pay period
and the record shows that she worked the pay period prior to and immediately following the
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‘ciocked’ pay period. This would indicate that it was not an initial or terminal week of
employment. Some of the earnings records retained by the plaintiffs show the hourly rate paid
me employees.
Most importantly I have just received two Employment Agreements for the named plaintiff and
one other stating that "I agree that my hours may be increased or decreased at any time, upon
notice, with a corresponding change, if any, in my wages and berrehts as determined solely by
the Bank". This mernorializes by agreement the fact that if the employee does not work a full
schedule, they will not be paid a full guaranteed. salary. One document was signed on Ivlnch 22,
1999, the other December 20, 1993. Any changes in this agreement are to bein writing.
It is my understanding that each of the affected employees signed one of these agreements when
they were hired by Bank of America.
T`his additional information shows that these employees were not paid a guaranteed salary and
were classihed properly by the Bank as "Full-Time Non-Exempt" employees as stated on their
Earnings records.
Duties Directly Related to Management or General Business Operations
Once it is shown that the employees were paid on other than a. guaranteed salary basis the duties’
test question is mute in determining the exempt status of the client managers. liowever, I do not
think that the client managers meet the duti es test either.
W. Charles L. Chester, representing Bank of America in ‘oral mgiment re motions”, states that
the °‘status of nonexempt resulted from a study that was done by the former head of the
Deparnrrent of Labor for California, who did a study of the duties of the client managers in
Washington. As a result of that study... the decision was made to convert, or to abandon the
cxen:1ption...” Mr. Chester goes on to indicate that the consultant’s finding was that the
employees viewed their job as a sales job and therefore nonexempt. While we do not have a
report on the consultant’s findings, we were provided notes from the consultant, Mr. Lloyd W.
Aubry. In Mr. Aubry’s notes from May 2000, he notes the percentage of time spent in various
activities. In all cases it looks as if telephoning clients, both cturent and prospective, occupies
most of their time. In his notes he states "defmitely not a financial advisor" at one point. l found
nothing in those notes that would indicate Mr. Aubry thought these employees were exempt.
Both Mr. Aubry and Mr. Farrington utilize percentage of time spent in various activities to
presumably malyze the prirnary duty test as suggested in the new Regulations 541.700.
The Bank did not change their pay practice to show the non-exempt status of these employees for
two more years after Mr. Aubry°s findings. Employee interviews indicate that Client Managers
spend practically all of their work time in a cubicle or offr ce with a telephone headset making
calls to clients and receiving calls iiom them. They explained this work as reactive rather than
proactive. In other words, they try to accommodate their clients when the client calls the bank.
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Case 2:03-cv-02262-ROS

Document 150-3

Filed 09/28/2005

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Case 2:03-cv-02262-ROS

Document 150-3

Filed 09/28/2005

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